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When you look at trading on the foreign exchange Melbourne you should consider the ways that this can be done safely. It is important that you are safe on the market otherwise you could lose your entire trading account. There are a number of ways that you can trade safely and you need to consider this. These ways will include the use of a trading strategy that you are comfortable with and understanding your risk capacity. You should also consider the impact of capital on the safety of your trading on the foreign exchange Melbourne.

The Risks of the Foreign Exchange Melbourne

Before you look at how you can trade safely you need to consider the risks that you face on the market. The risks that you face will impact the overall safety of the trading that you complete. There are certain risks that you cannot avoid like to inherent risks of the market. However, there are other risks that you can avoid like the excessive use of leverage. You need to determine the risks that you face can plan your safe trading accordingly.

The Trading Strategy that You Use

The trading strategy that you use will affect the safety of the trading that you are able to complete. There are certain trading strategies that are riskier to use than others. You need to consider this when you trade because the high risk strategies will not allow you to trade safely. There are many traders who look at using high risk strategies because of the profits that they can make. These profits will be greater because the risks increase them. This is where you have to determine whether or not the profits that you make on the market are worth the risks you are going to be taking.

The Risk Capacity that You Have

When you understand your risk capacity you will be able to determine the risks you can safely take. There are a number of factors that create the risk capacity that you have. The first is the risk tolerance that you have and the second is the capital you have. This higher your risk tolerance and capital the higher your risk capacity will be.

The risk tolerance that you have will tell you about the risks that you can mentally and emotionally handle. The capital will tell you about the risks that you can handle financially. You need to be able to handle the risks you take in all of these areas in order to be safe.

The Capital You Have

The capital that you have will impact the safety of your trading. This is through the buffer that the capital creates for your trading. If you have a high level of capital then you are going to be able to use more risk. This is due to the fact that your trading account balance will be able to handle the additional risks. If you have low capital then risks can easily wipe out all of the money you have in the trading account.

Profit and loss is a complicated business with all the pieces parts in FX, or is it? Do not get discouraged because you see a lot of maths or explanations before you truly get to the concept of profit or loss. Any background information you have read so far is just providing the ground work for the simplest calculations you will need to create a proper position in foreign exchange trading. If you have not read the examination of leverage for part one of profit and loss, you might want to do so. The lot sizes with pip value and leverage explanations were given to help you arrive at the information you need to calculate profit and loss.

FX Pip Value and Leverage

In order to calculate profit and loss for a currency pair you need to understand the amount of leverage you have on the account and how much a pip is worth when it changes. If you see the FX rate of 1.4525/1.4530 you know a couple of things for the currency pair, which we will say is the AUD/USD for the example. The first is that there is a 5 pip spread for the transaction. You want to buy a standard lot of 100,000 at 1.4530.

The price after an hour moves to 1.4550. The difference in the two rates is .0020 or 20 pips. Since you did the pip value calculation you know that the USD with a standard lot size is equal to $10. So for every pip the rate moves you make $10. If you have 20 pips in which one is equal to $10, then you made $200 because you take the value and multiply it by the pips.

Right now you are thinking that was pretty easy for the profit calculation, right? It is now that you have learned all the FX pieces parts. The fact is you can use calculators, charts, and apps to help you with the pip value and then find the profit. You may not need the pip value if you use a profit and loss calculator. It will depend on the site you have chosen for your broker or forex tools. There are certainly plenty on the market.

FX Profit and Loss: How to Find Loss

You know how to find profit in FX. Yet, how do you find any loss you might sustain? It is another easy answer and you have just learned it. If the above example moved from 1.4530 to 1.4510 and you bought in to the currency pair thinking the AUD would gain, then you sustained a -.0020 or negative 20 pips. You lost $200 instead of gaining it. You need to use the calculation based on the position you opened and the rate movement. If the rate moves against your position then it is a loss. If it moves in the same way as your position then it is a gain for you. FX is only complicated if you jump in feet first without testing the waters and gaining proper education.

A lot of the time articles like to simplify the examples you see to help you understand how to trade. The following is an overview of FX in terms of profit and loss. An examination of the lot sizes and some talk about leverage with regard to profit and loss will be included. For traders the forex world can open up into a very profitable return. The downside is determining how that happens when you are new to trading. It might seem complicated from the outside and some traders even give up, but if you stick with it the chance you will make a proper return on your investment is there.

FX Lot Sizes

Most sites will have anywhere from three to five lot sizes. It starts with a nano lot at 100 units. It is rare for a broker to offer this, but some have done so. You also have a large lot size of 1 million units, which is more for international corporations, banks, and interbank system. The typical FX trader deals in micro, mini, and standard. They are 1,000, 10,000, and 100,000 respectively.

For those not aware the smallest change to a foreign exchange rate is the pip. It is .0001 of a change. This small value can provide a significant profit, but that is only when you have a large lot size to invest. Take a look at a couple of examples:
USD/JPY with a rate of 119.80 has a pip value of $8.34. This is found by taking .01/119.80 and multiplying it by the standard lot size of 100,000.

USD/CHF with a rate of 1.4555 would then be .0001/1.4555 x 100,000 to get a pip value of $6.87. Note the .0001 and .01. The JPY rate is always two decimal places, while other pairs are 4 numbers.

If you have the EUR/USD then the calculation is different in FX. It is EUR/USD rate of 1.1930 in which .0001/1.1930 x 100,000 = 8.38 x 1.1930= $9.99 or $10 pip value. The USD when there is a lot size of 100,000 is always $10 as the quote currency. If you trade 10,000 units you would see $1 for the USD pip value.

FX Leverage to Make the Lot Size

You have the concept of lot sizes and pip value. Now is the time to look at FX in terms of leverage. Leverage like 100:1 is 1% of the position you want to open. If you want to trade 100,000 and you have 5,000 in your account it is difficult to make the trade, right? Leverage provides you that chance by allowing you to keep a margin balance in your account. With a 1% margin you can have $1,000 in your account and borrow the rest of the standard lot size. Any profit or loss in the FX market will come out of the balance you have in your account. Margin call happens when all available funds in your account are used due to losses. The trade closes to prevent your account going into a negative amount.

This article looks at the role of rebalancing on the foreign exchange market.

When you trade on the foreign exchange market you need to consider the role of rebalancing. Rebalancing on the foreign exchange market is something that you have to consider. It is important that you understand what this is and why it is important for your trading. You should also consider what you need to look at when you rebalance.

Rebalance or Diversify?

There are a lot of traders who confuse the act of rebalancing your trading with diversification. This comes from a lack of understanding about the differences between these two activities. When you diversify your trading you are going to be looking at the expansion of what you do. This includes the trading with more currency pairs and the use of different forex trading strategies.

However, when you rebalance your trading you are going to be looking at the trading that you are currently doing. You need to determine whether or not the trading is still viable on the foreign exchange market. You will then change the parts that do not work and not add onto the trading that you are completing.

Why You Need to Rebalance Your Foreign Exchange Market Trading

It is important that you regularly assess and rebalance the trading that you complete on the forex market. If you do not take the time to rebalance your trading you could be using techniques and methods that do not fit your trading and the market. When you trade with these strategies and methods you are more likely to make a loss on the market than a profit. This is something you should try and avoid at all times.

What You Need to Look at

When you rebalance your trading you need to look at certain aspects of your trading. You need to look at the strategy and currency pairs that you are trading. You should also consider the risk capacity that you are working with. If any of these trading points are not correct you will not be trading properly.

The Strategy You Use

When you look at the strategy that you use you should not only consider the profitability of this. When rebalancing your trading you have to consider whether or not the strategy is still right for you. The strategy that you use as a new trader may not be the one that you should be using as a more experienced trader. The experience that you have could change what you are comfortable with. You should consider this and if you are no longer comfortable you need to change the strategy.

The Risk Capacity that You Have

There are some traders who have a low risk capacity when they start trading. This could be due to a number of different factors such as having a high risk tolerance, but low capital to trade with. As you trade the amount of capital you have should increase. If you are looking to reinvest the profits that you make into your trading you could change the risk capacity that you have. The capital amounts will increase as you trade and this means that you could buffer greater risks. Of course, you do not have to change the risk capacity that you work with if you are comfortable with the risks that you are currently taking.

This article looks at the steps you have to take to trade on the foreign exchange Melbourne.

There are a number of steps that you should take before you start trading on the foreign exchange Melbourne. These steps will ensure that you are able to trade with confidence and limited amounts of stress. Some of these steps are looked at as common sense, but there are many that some traders overlook. Overlooking these steps will lead to losses on the market that you could easily avoid.

Getting Your Finances in Order

The first step to trading on the foreign exchange Melbourne is to get your finances in order. When you complete this step you have to look at the capital that you are going to be using to trade with. This capital needs to be money that you can afford to lose. If you do not have any money that you can afford to lose then you should not be trading. When you trade with money that you cannot afford to lose you are going to be more vulnerable on the market and you could give into your emotions.

Learn the Basics of the Foreign Exchange Melbourne

Once you know that you have enough money to trade with you have to consider the knowledge that you have about the foreign exchange Melbourne and how to trade. The best way to gain the knowledge that you need is to look at forex training. Training will cover the basics of the market and the basic ways that you can trade.

The forex training that you go through should suit the level of experience that you have. New traders need to find training courses that are geared toward the new trader. Traders who have more experience should look at the more advanced training that will teach them new methods for trading.

Set Your Trading Goals

Before you look at anything else you need to set your trading goals. Your trading goals should be what you want to realistically get out of the market. If you are not realistic when you look at what you can get then your trading goals will be dreams. It is important that you set short and long-term trading goals. When you do this you will be able to gauge how well you are doing on the market and you will be able to determine whether or not you are still on the right path.

Know Your Risk Capacity

Once you have your trading goals you need to consider what your risk capacity is. Your risk capacity will tell you about the risks that you can take when you trade. This will be a combination of the risk tolerance you have and the capital that you have. Having a high risk tolerance will not help you if you do not have the capital amounts to buffer your trading.

Determine Your Trading Style

The last point that you should consider before you choose a strategy is to determine your trading style. Your trading style will impact the strategy that you can use and the analysis that you complete. Your trading style will be a combination of many factors including your personality.

This article looks at forex news and how it affects trading on the forex market.

There are two basic methods through which a forex trader can analyse the foreign exchange market – fundamental analysis and technical analysis. When using technical analysis you will be studying market movements using forex charts. When using fundamental analysis you will be reading forex news releases to predict the trend direction. If you choose a fundamental analysis strategy, then you need to be aware of the different economic indicators available for use. You should also understand how you can use forex news to experience profitable trades.

Defining forex news and news releases

Forex news refers to any news releases that influence currency price movements on the foreign exchange market. Generally, the news revolves around global events such as political instability or changes in a country’s economic standing. By determining the reaction to these forex news releases, one is able to predict the future movements on the forex market. If the reaction is positive then there is a greater chance of profitable trends.

Using the forex news releases?

Many traders will make the detrimental error of reviewing forex news releases in isolation. For example, if the non-farm payroll report is being released traders will look at this report exclusively and base their market predictions on this. While you must consider the non-farm payroll report, you should also examine the context of the report. It is important to remember that all news impacts the forex market and thus must be viewed as interconnected.

Understanding the forex news releases

Once you have established that reading forex news is the analysis method for your trading style, then it is important you personalise your research. The most effective technical analysis traders will use indicators they are comfortable with and find easy to navigate. This ensures simplicity and a greater chance of profits. This approach is essential for success in fundamental analysis as well. You should establish which releases you are going to be working with and how this impacts your forex trading strategy. This is discussed below.

Some traders have a stronger working knowledge of economic news and how this affects the foreign exchange market. If you are one of these traders then you should consider utilising on economic news releases. This will limit the number of trading opportunities available to you, but it will allow for a focused strategy and greater chance of profit with the opportunities you do trade. This trading strategy does require patience as economic news releases arrive approximately once a month thus trading may occur only once a month. If you are considering a short-term trading style then this would not be suitable; however if you are looking at long-term trading then using economic forex news releases would be a useful trading strategy.

Fundamental short-term strategists would be best suited to using all forex news releases. As you will be dealing with news on a daily basis you will have a great amount of trading opportunities. However, you must remember that not all releases are relevant to your trading pair so you will have to filter between the important and insignificant items.

Quite a bit has affected the European market. FX rates should have reacted happily to German elections being over; however, the little gain was unable to remain in the euro after all situations arose. Merkel won the election, but is in search of a coalition partner. The PMIs for the euro were up, but German factory details took a slight dip. Add in the AUD increasing along with JPY because of better Chinese manufacturing data and things for the euro have not looked the happiest. Find out the full details below.

ECB announcement affects FX Rates

Monday details are coming out on Tuesday, which change how one might examine the week going forward. The ECB or European Central Bank president made an announcement that has directly affected euro FX rates. The announcement stated interest rate cuts would be made. The desire is to put inexpensive money into the market.

The euro actually hit new lows against the JPY and USD because of these remarks. It indicates the Eurozone and all of Europe is still struggling. This announcement was made just moments after the worries of Angela Merkel needing to gain a coalition. Her party may have won, but there is still much to gain in order to be victorious for Germany’s future.

Germany is one of the main providers to positive euro news, thus when a new election takes place there is always a period of adjustment for the FX rates. Many feel the euro is going to be dovish in order to prepare for the upcoming months. The rate certainly needs to become more valuable.

Germany also had issues with its manufacturing report being less than expected. With the Fed taking the tapering off the market it has been a solid hit against the euro. The slowdown in manufacturing and the tapering talks will require the monetary officials in Europe to do anything they can to regain value back in the euro.

On Monday the president of the ECB stated the bank is ready to offer long term loans, but will keep money market rates. Unfortunately this choice could offset inflation so that it is too low for the better economic situation the Eurozone needs to have.

FX Rates Change with Uncertainty

The main problem for euro FX rates is uncertainty in the Fed taper and the new government. It is necessary to act quickly on the part of Germany’s new government to establish a favourable coalition. Yet, no one knows what it might look like especially since the euro has turned softer. The euro could continue to soften affecting the overall situation.

The USD might have gained a little in FX rates with renewed hope in tapering; however, it is still at seven month lows against Asian currencies. The euro may lose a little more against the USD before gaining it back and the AUD is certainly gaining in value at the moment. All of this is making things a little difficult for the euro to even out.

This article provides some tips on how to trade effectively on the foreign exchange market. Many new traders enter the foreign exchange market with the belief that there is a secret strategy to making tons of cash. Usually these traders are those who believe that forex is a get rich quick scheme. Unfortunately, this is not true. In fact, only approximately 10% of foreign exchange traders make a steady income off the forex market; the rest profit but will most of the time just breakeven. Yet, money can be made on the foreign exchange market if you trade efficiently. This requires a great deal of preparation and acceptance that there is no secret formula. This article will provide some tips on how to trade the market effectively.

Forex training

The first tip is to gain an education before entering the foreign exchange market. Many new traders are very eager to being trading on the forex market and ignore official training, this is a mistake. The foreign exchange market requires specific skills and an understanding of certain technical terminology. If you are unaware of these aspects then the chances of detrimental losses are greater than profits. Foreign exchange training opportunities are available in various forms with the most popular being online training courses. These courses can be likened to distance learning programmes as all the academic activity is completed online via emails and online presentations. The majority of courses last between 6-8 weeks and you will be allowed to keep all material after the course is completed. The cost differs dependent on the course, and some programmes are free of charge. A second option is the mentorship programme. This opportunity is recommended for the more experienced trader or those with a basic understanding of forex trading. One will shadow a forex trader and learn from practical experience; therefore the focus is on strategy development and implementation. The cost is usually great, definitely more than the online courses.

The foreign exchange demo account

It is recommended that all new traders utilise a demo account before entering the forex live market. This allows you to develop a trading plan and strategy suited to your personality and capabilities. Of course, you must find the correct trading platform to suit your trading needs. The most effective trading platforms will have built-in trading tools such as forex charts and signals. They will ideally have forex news feeds and report features. It is recommended that you find a demo account whereby you can adjust certain aspects of the simulation. Some traders will experience a negative transition to the forex live account because of unrealistic leverage and high capital amounts on the demo account, which is not available on a live account. By altering these on the demo you will have a smoother transition to trading on the live market.

Preparing emotionally

While technical preparation is important, one must also prepare for the mental hurdle one may encounter on the foreign exchange market. Many new traders will find themselves engaging in emotional trading if they are not disciplined enough to adhere to their trading plan. Unfortunately, demo accounts do not help in preparing for mental pitfalls; therefore you must learn to control emotions via forex training and independent research on psychological coping mechanisms.

This article looks at the most important aspects of the foreign exchange market that should be noted by a trader in order to trade effectively.

For those who are not interested in currency trading the term ‘foreign exchange market’ is completely foreign. However, this foreign exchange market is potentially the most lucrative market in the world and one of the simplest ways to make money, if you trade effectively that is. In order to be profitable you must understand what the forex market is.

The foreign exchange market

The foreign exchange market is one of the largest, most lucrative and volatile trading markets in the world. Unlike the stock market, this forex trading market engages in the exchange of currencies instead of stocks; it is also decentralised with trades passing through an interbank network instead of central hub. This allows for traders to interact directly with one another making trading more flexible. However, this decentralisation can also cause difficulty should one trader not honour their side of the trade.

Originally trading on the foreign exchange market was reserved for large corporations, central banks and hedge funds exclusively. However, with the introduction of an online format, individuals are now able to access the trading market through online trading platforms. This has increased the size and activity on the foreign exchange market. The 24 hour trading times from Monday to Friday also allow for traders worldwide to trade at any time regardless of location, making it one of the most active markets on the globe.

Foreign exchange market trading

1. The trading platform

In order to trade on the foreign exchange market you will require certain things, including a forex broker and forex trading platform. The trading platform can be acquired via a forex broker, and it us through the platform that you will trade your currency pairs.

There are various points to consider when choosing an effective trading platform. One must look at the different built-in features provided. There are basic tools which should be available such as forex charts, signals and reports; however, a sophisticated platform will provide one with the option of live forex news feeds and commentary. It is important you find a platform that is easy to navigate and are comfortable with as your platform is a vital part in trading.

2. The trading tools

There are different trading tools available to one that can contribute to effective trading. Many traders will utilise technical analysis when developing a strategy and the most beneficial technical tool is the forex signal. The forex signal assists both new and experienced traders in finding the entry and exit points to trade on the most appropriate positions. It is important to use these signals as support and not a trading strategy.

An important fundamental trading tool is that of the forex calendar. Fundamental traders utilise forex news to trade the foreign exchange market, and are required to analyse the news releases to identify which positions to place. In order to determine which releases are relevant to their currency pairs one should employ a forex calendar. This trading tool lists the releases in order of importance according to impact on the market and relevancy to your currency pair.

Foreign exchange trading is not easy and if you want to achieve success in this volatile market, it is important that you choose a good trading account that suits your individual personality. The forex accounts available to traders include standard, micro and mini and you can make the choice as per your specific needs and requirements.

Micro trading accounts have become a popular choice of traders all over Australia as they have features that are similar to the standard account and enable traders to place smaller trades. If you are a beginner and do not understand the basic difference between trading accounts, let us illustrate it through an example. When you opt for a standard account, you may be able to place lots of 100,000 whereas in the mini account you can place lots of 10,000. With the micro account you can place lots of 1,000 units of your base currency.

Advantages of using a micro account for foreign exchange trading

The biggest advantage of opening a micro account for foreign exchange trading is that you need only small capital to open this account. It is an ideal choice for small traders who are trading on a budget. If you are a beginner, it is best to open this trading account as it provides you an opportunity to learn the fundamentals of this market without risking a lot of money.

Before you start trading in the forex market, you need to understand that there are inherent risks associated with this market. If you are not careful, you may lose big within a few trades. A micro account is one of the simplest ways to manage the risks of trading. As you will be placing smaller lots for trading, you may be able to minimise risks and maximise profits.

You will be able to practise different forex trading strategies, as the risk level is low. This can help you identify strategies that work best with different pairs of currencies. As the risk involved in trading with the micro account is less you may not lose big even if you have a losing trade. This helps protect your investments from big losses.

You can learn money management strategies like limit orders and placing stop loss orders on all your trades using the micro account. This can enable you to manage the risks associated with this market in an effective manner.

Tips for choosing micro accounts for foreign exchange trading

It is best to choose a micro account for foreign exchange trading from reputed brokers so that you may be able to get all the required features and functionalities in the account. You can choose brokers who are licensed and regulated by the Australian Securities and Investments Commission (ASIC) so that you get the best customer service and support from them.

When you choose a trading account that suits your trading style you may be able to execute a fast trade and take advantage of the trading opportunities available in the forex market. This can enable you to make consistent profits on your investments.